CIVIL SERVICE FUNDS

Northern Advocate, 1 December 1933, Page 6

CIVIL SERVICE FUNDS

CONFERENCE OF PARTIES

SERIOUS POSITION STRESSED.

SACRIFICES NECESSARY,

REVIEW BY: MR COATES.

(Per Press Association- —Copyright.) WELLINGTON, This Day. The necessity for sacrifices being ' made by both contributors and annuitants in order to place the State superannuation funds on a sound basis stressed by the Minister of Finance, the Rt. Hon. J. G. Coates, in an address yesterday to a conference of ... representatives of the different State ~ organisations, which had been called to discuss ways and means of stabilising the fund®. Mr Coates referred to the findings “ of the National Expenditure Commission, and said if effect were given to - the proposals a number of existing annuitants would require to accept ,small- ’ er pensions. Present • contributors would have to submit to a general • • tightening up of conditions, particular- •. ly in' respect of the earlier retirement provisions, and the Government would need to, subsidise the funds, to a larger extent than at present. Breach of Contract? E -- In connection with.. the proposed, pound for pound subsidy, Mr Coates 3 said the amount to the Railway Fund, £170,000, exceeded what % would .be payable under that subsidy. The position in connection with the Teachers’ Fund' arid the Public Service Fund was that an additional /;. amount of £210,000 would be required 1 • under the - pound for pound scheme. A Bill embodying practically in toto reL " commendations ''of the National Expenditure Commission was drafted last • session and introduced into the House, .The Bill was referred to a Select Comniittee for. a report. The Comriiittee Y eventually recommended that the Bill be not allowed to proceed. The objeetions raised to the Bill were, mainly -: ’ from members, of, the affected organisations. They contended that an alteration would be a moral breach of faith or contract. ■ r “ Whether there ia any such moral breach of faith' or not —and the present 1 ‘ instability of the funds cannot be laid at the door of the present or any other Government in particular—contributors and annuitants must face facts, however unpalatable they may be, and realise that financial considerations • will not allow of the fund® being sta- • bilised on the basis of present benefits -•-arid privileges, particularly, in regard to early retirements, ” said Mr Coates. “If the funds are to be made solvent, - sacrifices must be made .by .contributors ! and annuitants. The alternative proposals made to the Committee for sta- . ' bilising the funds without any dimin- . ution of -benefits' to contributors and i annuitants inwdved the issue of GovJ eminent stock to the amount of ap s r . proximately £4,000,000. That is quite unacceptable J under present eondi- ' tions. ”

Emphasising' the serious nature of the position, Mr Coates said the income of the Teachers’'Fund for the year ended January, 1933, was £217,881, and the outgoings totalled £324,405. The fund was forced to realise £92,000 of Government, securities and, in addition, there had been a fall of approximately £16,000 in local body debentures and mortgages/ “Cannot Go On.”' “It is apparent this cannot go, on for very long, as the bulk of the funds is now in mortgage securities, which are practically unrealisable at - present,” said the Minister. “The position is "so acute that, in order to avoid selling securities on the open market, the fund, although only a portion of the year has elapsed, has already drawn upon the Treasury to the full extent of the ■ Government subsidy of £43,000, which normally would not be-payable until January 31, 1934. “In regard to the other funds, the assets of the Railway Funds last year were diminished by £120,928. The Public Service fund last year was not forced to realise any of its assets, largely owing to the fact that it received unexpected assistance to the extent of £54,000.by way of additional subsidies on contributions and interest.

“It is also as well to realise that the finances of the funds are really worse ■ than are disclosed by these figures, which assume that interest due and outstanding, amounting to £108,700, will bo collected in full, “Briefly,” ' Concluded' Mr Coates, “the position can be summarised,, as thus: —(a) That the funds are at present actually unsound, and some definite steps must bo taken to deal with the position; (b) that this is beyond the financial resources of the State to put the funds on a sound basis and still to give contributors the same rights, liberal conditions and privileges they have at present; (c) that the funds can be put on a sound finaneial basis and the resources of the State should be made sufficient to provide the necessary increased subsidy and annuitants will accept the lesser benefits recommended by the National Expenditure Commission and embodied in last year’s Bill.”